Recent FTC Text Message Spam Case: A Cautionary Tale for Mobile Marketers

The FTC is serious about enforcing the opt-in requirement for mobile marketing. On February 23, 2011, the FTC asked a federal court to shut down a text message spammer and freeze the defendant’s assets. The FTC asserted violations of the FTC Act for deceptive advertising as well as violations of the CAN-SPAM Act based on the text messages’ failure to include an opt-out and the sender’s physical mailing. See: http://1.usa.gov/fLuRBZ

The defendant, Phillip A. Flora, allegedly sent over 5.5 million unsolicited text messages in a forty day period, marketing loan modification, debt relief, and other financial services. Based on responses he received, including those asking not receive any further texts, Flora allegedly developed a list to resell of consumers interested in debt modification. Consumers lost money because of text messaging fees levied by wireless carriers, in spite of the fact that they never chose to receive the text messages, according to the FTC.

Certainly, this particular case was of unique interest to the FTC. Not only were consumers losing money in text messaging fees, these text messages appeared to prey on vulnerable citizens who perhaps were already suffering financial loss due to the mortgage crisis.

The case is still a cautionary tale for even the most benign mobile marketing campaign. It underscores the need for obtaining consumer consent before implementing a mobile marketing campaign. It also outlines some of the statutory requirements for disclosures in mobile text messaging. Mobile marketing is a growing tool for driving traffic to retail locations and delivering a profitable ROI. Marketers need to learn the legalities of such promotions to avoid compliance issues.